Grossman Model - Professor Melissa Mcinerney. PDF

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Professor Melissa Mcinerney. detailed notes on the course topics needed for exams and assignments...

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Introduction Monday, 21 September 2020

8:45 PM

• We are born with an initial stock of health that depreciates • We can take actions that increase( eg run)/decrease (eg eating chips) our st • Our health is both an investment and a consumption good that gives us utili Utility: the pleasure or satisfaction people get from an economic activity, it is repr of consumption of two or more goods We bring a stock of health into a particular period, level in one period affects wha next period Health is a consumption good Ut=U(Ht,Zt) Depends on health (Ht) and other non-health consumption goods, composite goo represent everything else. An input can impact both H AND Z, or solely affect health or solely affect the mark Time is split between being sick (Ts) and being productive (Tp) Total productive time increases as health increases (graph looks like a logarithmic Minimum level of health = is when someone is no longer alive and hence they hav All our time in existence is split between productive time and sick time, and sick ti individual cannot do anything because they are sick Our productive time can then further be spent on -Working for pay Tw -Leisure TZ -Improving their health Th Individuals choose how much time to spend on improving health care and then di time between the other two

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vide the rest of the...